This directive comes a day after the central bank barred IIFL Finance, another NBFC, from sanctioning gold loans after observing serious "serious deviations".
The banking regulator found serious breach of regulatory compliance on part of JM Financial Products, in terms of repeatedly lending to a group of customers for investing in IPOs and non-convertible debentures (NCDs) with 'perfunctory' due diligence.
"This action is necessitated due to certain serious deficiencies observed in respect of loans sanctioned by the company for IPO financing as well as NCD subscriptions. The RBI carried out a limited review of the books of the company on the basis of the information shared by the Securities and Exchange Board of India," the RBI said.
JM FINANCIAL PRODUCTS can, however, continue servicing its existing loan accounts through the usual collection and recovery process. It is a systematically important nondeposit-taking subsidiary of listed firm JM Financial, which holds 99.71% in the NBFC as on March 2023.
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